Entrepreneurs take notice: Uncle Sam wants a piece of your startup |
The federal government signaled a new direction in federal funding this week when it announced plans to put as much as $150 million into a private semiconductor startup. Instead of a grant or a loan, the government would take an equity stake.
It’s a meaningful departure from how federal funding has traditionally operated. For years, federal R&D support came structured as non-dilutive grants and Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards that didn’t require equity concessions. An early-stage company proves its idea with federal support, investors wait for validation, and the company grows. If the government begins converting grants into equity stakes, that calculus changes fundamentally.
The semiconductor deal is the latest in what has otherwise been a relatively quiet shift taking place inside the federal funding system as the Trump administration considers treating some grants like venture investments.
For founders, this creates genuine uncertainty. The government has not yet defined the rules of engagement for what ownership in a startup means. There are no clear answers about how much equity might be taken, how dilution would work over time, when the government expects a return, or who would manage these positions.
Startups already struggle to keep their........